[News] Huawei, Alibaba, Tencent, Xiaomi, Baidu, ZTE and Lenovo Invest in Optical Communications

Optical communications has become an increasingly important investment area for technology companies in recent years. Huawei, Alibaba, Tencent, Xiaomi, Baidu and ZTE, among others, have expanded their presence in related fields through investments, including optical chips and optical modules.

Huawei: Expanding Upstream Optical Communications Through Investment and Acquisitions

As a supplier of optical transmission and access equipment, Huawei has an established optical communications business of its own. It has also invested in upstream technologies, including optical chips and silicon photonics, primarily through its investment arm, Hubble Technology Investment. Its investments span indium phosphide (InP) substrates, thin-film lithium niobate, VCSELs and other laser chips, specialty optical fibers, and high-speed connectors.

At the materials level, Hubble invested CNY 30 million in Xinyao Semiconductor, a subsidiary of Yunnan Germanium, in December 2020, acquiring a 23.91% stake and becoming its second-largest shareholder. Xinyao Semiconductor focuses on semiconductor materials, including InP.

Optical chips are another key investment area for Huawei, with holdings in companies such as Yuanjie Semiconductor, Everbright Photonics and Milphoton Semiconductor.

Yuanjie develops DFB and EML laser chips, as well as continuous-wave (CW) light sources for 800G and 1.6T optical modules. Milphoton Semiconductor focuses on high-speed InP optical chips, including products targeting 800G and 1.6T AI computing applications.

Hubble has also invested in specialty optical fiber manufacturer Changjin Photonics, which develops rare-earth-doped specialty fibers. Hubble held a 3.80% stake in the company ahead of its IPO.

Alibaba: Investing in Silicon Photonics and Optical Interconnects to Meet Cloud Computing Demand

Alibaba has invested more directly in areas related to high-speed interconnect requirements of cloud computing and AI infrastructure. Its portfolio includes silicon photonics modules and optical interconnect chips, with Crealights Technology and Shanghai Xizhi Technology (Lightelligence)  among the companies to watch.

Crealights provides optoelectronic interconnect products, including optical modules and active optical cables, for AI data centers. Xizhi, described by media reports as a potential first publicly listed company focused on AI silicon photonics, develops products including LightSphere X, a distributed optical switching GPU supernode platform that has been deployed in multiple clusters with thousands of GPUs.

Tencent: Targeting Optical Interconnects Inside Data Centers

Tencent is also an investor in Xizhi. According to its listing documents, Tencent Mobility held a 4.19% stake in the company before its IPO, declining to 3.56% after listing.

Tencent has also invested in two other companies in the sector: JaguarMicro and Qting Optoelectronic. JaguarMicro develops data processing unit (DPU) chips and acceleration solutions for data center networking and storage. Qting Optoelectronic focuses on high-precision 3D optical inspection equipment, including systems used to inspect optical communications modules.

Other Players: Overlapping Investment, Different Entry Points

Xiaomi, Baidu, ZTE and Lenovo have also invested in optical communications.

Xiaomi’s investment overlaps with those of Alibaba and Huawei. Xiaomi-related entities and Alibaba are both shareholders in Crealights.

Xiaomi and Huawei also share investment exposure to optical chip companies. Xiaomi has invested in Vertilite, while Hainan Jimu Venture Capital, an entity under Xiaomi, holds approximately 6.48% of Photonx Technology.

Baidu, ZTE and Lenovo have also invested in Crealights and Xizhi, although their entry points and investment timelines differ.

(Photo credit: Huawei)